New form of creation and distribution of share capital. Part 2

  • Artem Kvashnin
    • 13 May
    • 6 min read

As we have already written, we have to solve two issues to implement our philosophy in managing the company.

  1. Lack of productive assets.

  2. Distribution mechanism.

Since there is no property, it has to be created. The only possible option to do it is to raise joint-stock capital, but we are quite aware that IPO doesn’t suit us due to its complexities which can’t be neutralized by positive effects of the initial offering. In other words, the value, in this case, does not cost its price. Considering this low efficiency and high IPO cost, we have decided to create joint stock capital so as to realize the tasks set in the following way: once a week we place 50% of net profit multiplied by the coefficient of the customer’s loyalty index into the internal fund that will consist of high liquid and low volatile financial instruments. We infer such instruments are debt securities of the government and large companies, with their rate of coupons exceeding inflation with a minimum coefficient of 1.5. This fund is going to be our “productive assets” or a kind of joint stock capital, as it will be directly connected with the actual value of our company. The more work is done, the more customers are satisfied, the larger assets appear in the fund.

The second issue concerns the distribution mechanism of this capital. We are well aware that people tend to receive momentary benefits to the detriment of strategic planning and high liquidity of the instruments offered, so we have approved some restrictions imposed on the circulation of assets by our fund at the general meeting of the company.

  1. 100% of the main fund assets can be spent only on investing into a new business-project.

  2. The team can withdraw cash and distribute 10% of the fund among participants twice a year at most.

  3. The team can reinvest coupons received on fund financial instruments into the fund or distribute as money assets among team members.

What do we mean when speaking about a new business-project (item 1)? As we have written earlier, we assume that in future such forms of business organization will appear, when all company employees will be able to enjoy full freedom of action and self-expression. And if so, why not create a mechanism to support business start-ups and business projects of our employees who would like to implement their abilities and skills in situations when the parent company doesn’t have enough competence or beyond its scope of interests. The fund we started to create at the beginning of May this year is called ICVC (Intra-corporate venture capital), we hope its name is relevant to all the things we are going to implement in our company, that was exactly described in this post.

We are going to tell you about ICVC development in our further posts.

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